Creditsights' Cisar: Defaults to Creep Higher Into Next Year

The video discusses the impact of interest rate sensitivity on the corporate credit market, highlighting the supportive nature of flat curves for refinancing. It explores the nuances of the default cycle, noting that while defaults may rise, they are not expected to reach crisis levels. The discussion also covers the absence of acute stress in specific sectors, with companies leveraging low borrowing costs to manage rising rates. Finally, the video forecasts the 10-year treasury market, predicting flat curves and stable Fed rates.

How do flat curves affect the refinancing perspective in the corporate credit market?

• They make refinancing more challenging.

• They are supportive for refinancing.

• They increase borrowing costs significantly.

• They lead to higher default rates.

What is a key reason the current default cycle might differ from previous ones?

• Companies have less cash on their balance sheets.

• Interest rates are expected to decrease.

• Maturities have been shortened significantly.

• Maturities have been extended and companies have more cash.

Which sector was previously known for having acute stress?

• Retail

• Healthcare

• Technology

• Telecom

What is the year-end forecast for the 10-year treasury yield?

• 5.0%

• 4.0%

• 3.4%

• 2.5%

What is the expected action of the Fed regarding interest rates by the end of the year?

• Keeping rates unchanged

• Hiking rates to around 3.25% to 3.5%

• Hiking rates to above 5%

• Lowering rates to below 2%